NOT FOR PROMOTIONAL USE

Innovation InOphthalmicsOphthalmic Innovation Summit @ AAO 2018October 25, 2018

Mark IwickiChairman & CEO, Kala Pharmaceuticals

NOT FOR PROMOTIONAL USE

Disclaimers and NoticesThis presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties including statements regarding INVELTYSTM (loteprednol etabonate ophthalmic suspension) 1% for the treatment of inflammation and pain following ocular surgery and the development and regulatory status of KPI-121 0.25% for the temporary relief of the signs and symptoms of dry eye disease. All statements, other than statements of historical facts, contained in this presentation, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements as a result of various risks and uncertainties including, but not limited to: whether the Company will be able to successfully implement its commercialization plans for INVELTYS; whether the market opportunity for INVELTYS is consistent with the Company’s expectations and market research; the data from the Company’s Phase 3 clinical trials of KPI-121 0.25% will warrant submission and filing of an NDA on the timeline expected, or at all; whether any additional clinical trials will be initiated or required for KPI-121 0.25% prior to submission or filing of an NDA, or at all, and whether any such NDA will be accepted for filing and/or approved; the Company’s ability to initiate and complete clinical trials on the timeline expected, or at all; whether the results of clinical trials will be positive and/or replicate the results from earlier clinical development and/or preclinical studies; that post-hoc analyses are normally given less weight by regulatory authorities than pre-specified analyses; uncertainties inherent in the availability and timing of data from ongoing clinical trials; uncertainties related to the Company’s ability to obtain regulatory approvals to conduct trials or to market products; the Company’s ability to build a specialty sales force and prepare for commercial launch of INVELTYS on the timeline expected, or at all; whether the Company's cash resources will be sufficient to fund the Company's foreseeable and unforeseeable operating expenses and capital expenditure requirements for the Company's expected timeline; other matters that could affect the availability or commercial potential of INVELTYS and the Company's product candidates; and other important factors, any of which could cause the Company’s actual results to differ from those contained in the forward-looking statements, discussed in the “Risk Factors” section of the Company’s most recently filed Quarterly Report on Form 10-Q and other filings the Company makes with the Securities and Exchange Commission. All information in this presentation is as of October 11, 2018, and should not be considered current after such date. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

2

NOT FOR PROMOTIONAL USE

Key Highlights

3

• Proprietary AMPPLIFY™ (mucus-penetrating nanoparticle, or MPP) technology to enhance delivery to target tissues of the eye

• IP protection for MPP technology and products through 2033

AMPPLIFY™ Technology

• Approved by FDA on August 22, 2018• FIRST & ONLY post-surgical steroid with class-leading combination of

powerful efficacy, safety profile comparable to vehicle and BID dosingINVELTYSTM

KPI-121 0.25% for Dry Eye Disease

• Topline results for completed Phase 3 trials announced in Jan 2018 • Anticipated filing of NDA in 2H 2018 with totality of data• STRIDE 3 Phase 3 trial initiated in July 2018; topline results EOY 2019

Commercialization Strategy

• Retained worldwide commercial rights for INVELTYS and pipeline product candidates

• Expect to commercialize in the U.S. with own specialty sales force

NOT FOR PROMOTIONAL USE

In the Eye, AMPPLIFYTM Particles Penetrate Through Tear Film Mucins to Enhance Drug Delivery to Target Ocular Tissues

4

NOT FOR PROMOTIONAL USE

KPI-121 0.25% for Dry Eye Disease

NOT FOR PROMOTIONAL USE

Dry Eye Is An Inflammation Driven Ocular Surface Disease

6

Episodic Flare Drivers

Fall Allergy

Season

Cold

Dry Winter

Spring

Allergy

Season

Summer

A/C use

Work & Home

Seve

rity

of Fl

are

Episo

de Dry Eye FlaresNo Rx treatment

approved

This graphic is included for illustrative purposes only

• Dry eye disease is a chronic, episodic disease of ocular

inflammation

� Ocular surface inflammation and tear film

instability lead to discomfort, visual disturbances,

hyperemia, and tissue damage

• ~33 million people in the US with dry eye, ~16 million of

whom are diagnosed2

• For most patients, dry eye is an episodic disease, not one

of continual symptoms

� Patients have symptom “flares” that wax and wane

in response to environmental triggers

� For these patients, chronic therapy may not be

necessary or appropriate

• Currently there is no approved product for the short-term

rapid relief of episodic symptoms (i.e., flares)

~90% of surveyed dry eye patients experience flares and the majority have multi-day episodes1

1Kala survey of 503 diagnosed dry eye patients, December 20172Source for dry eye disease market data: Epidemiology research commissioned by Kala and performed by a third party

NOT FOR PROMOTIONAL USE

Our Market Research Suggests Strong Patient Interest in KPI-121 0.25%*

7

High InterestLow Interest Interested

• Patients were very interested in the profile and would ask their physicians for more information about KPI-121 0.25%

• Patients specifically commented they would like an “as-needed” flare treatment vs. a chronic medicine

• The majority of patients indicated they want to try KPI-121 0.25%, expressing high levels of interest

• Patients highlighted they want rapid and strong efficacy with a reduction of “redness”, and short-term and “as-needed” flare treatment

~10% ~40% ~50%

The majority of surveyed patients expressed interest in the KPI-121 0.25% profile

*Based on a survey of 30 patients diagnosed with dry eye disease commissioned by Kala and performed by a third party.

NOT FOR PROMOTIONAL USE

Significant Market Opportunity for KPI-121 0.25% in Dry Eye

8

0

20

40

60

80

100

53% 56%

Patients who are currently on Restasis

Patients managed primarily with OTC treatment

Physician Adoption of KPI-121 0.25% for Patients with Breakthrough Flares*

(n=73 Ophthalmologists)

0

20

40

60

80

100

52%

Preference Share of KPI-121 0.25% as Induction Therapy

Physician Adoption of KPI-121 0.25% as Induction Therapy for Patients Initiating Restasis*

(n=73 Ophthalmologists)

• ~16M diagnosed dry eye sufferers in the U.S., of whom ~90% experience flares**

• Patients state that they experience a median of ~6 flares per year, each lasting an average of ~4 days†

• Market research indicates physicians would prescribe KPI-121 0.25% for ~55% of patients with flares and for 52% of patients being initiated on Restasis*

*Based on a survey of 73 ophthalmologists commissioned by Kala and performed by a third party.**Based on a survey of 503 patients commissioned by Kala and performed by a third party.†Based on a survey of 297 patients commissioned by Kala and performed by a third party.

NOT FOR PROMOTIONAL USE

Dry Eye Flares – Market Potential

9

~33M Total US Dry Eye Patients

~16M Diagnosed Dry Eye Patients

~14M Patients Experience Flares

~345M Treatable Flare Days/Year

US DED Prevalence Data (Kala Epidemiology Research*)

US DED Prevalence Data (Kala Epidemiology Research*)

90% of DED patients experience flares (Kala Market Research**)

Patients experience a median of ~6 flares per year, each lasting an average of ~4 days (Kala Market Research†)

Market for Dry Eye Flares††:~$8.6B Market Potential

*Epidemiology research commissioned by Kala and performed by a third party.**Based on a survey of 503 patients commissioned by Kala and performed by a third party.†Based on a survey of 297 patients commissioned by Kala and performed by a third party.††Assuming $350 WAC for a 2-week Rx

NOT FOR PROMOTIONAL USE

INVELTYSTM: FIRST AND ONLY Approved BID Post-Surgical Steroid

NOT FOR PROMOTIONAL USE

INVELTYS: The First & Only Post-Surgical Steroid Approved With BID Dosing

11

• Indication Statement Covers All Ocular Surgery: “INVELTYS is a corticosteroid indicated for the treatment of post-operative inflammation and pain following ocular surgery.”

• First FDA Approved Ocular Steroid With BID Dosing: “Instill one to two drops of INVELTYS into the affected eye twice daily beginning the day after surgery and continuing throughout the first 2 weeks of the post-operative period."

• Low Rates of Adverse Events: “The most common adverse drug reactions in the clinical trials with INVELTYS were eye pain and posterior capsular opacification, both reported in 1% of patients. These reactions may have been the consequence of the surgical procedure.”

• Intraocular Pressure Results Similar to Vehicle

• Packaged Product Will Have 24 Months of Expiry Dating at Controlled Room Temperature

• No Additional Post-Approval Commitments: Only completion of ongoing pediatric trial

For full prescribing information, please see our package insert available at: www.inveltys.com

NOT FOR PROMOTIONAL USE

The Ocular Surgery Market is Large and Growing

12

• ~8M ocular surgery procedures in 2017; projected to grow at a CAGR of 3.9% over the next 5 years

• ~9.4M ocular steroid prescriptions from July 2017 to June 2018� Brands account for ~30% of prescriptions and ~63% of gross

sales� Average WAC price for branded steroids is ~$192/Rx � At current branded prices the market is estimated to be

valued at ~$1.8B

• Steroid prescribing is concentrated among a small number of Ophthalmologists and Optometrists� ~6500 ECPs account for 80% of the target business

• Steroid market payer mix is ~52% Commercial and ~37% Medicare Part D

Steroid Eye Drop Payer Mix (June 2017 - May 2018)

US Ocular Surgery Procedures, 2017-2022

0

2500

5000

7500

10000

Total Ocular Surgery Procedures

Num

ber o

f Pro

cedu

res

(In T

hous

ands

)

2017 2022 (Projected)

3.9% CAGR

3% 52% 2% 37% 6%

0% 20% 40% 60% 80% 100%

Cash Commercial FFS MedicaidMedicare Part D Managed Medicaid

Sources: Ocular Surgery Procedures: Market Scope US Procedures data, 2017; Pricing: AnalySource data 2018; Rx and Sales: IQVIA NPA and NSP data July 2017-June 2018; Payer mix: IQVIA FIA claims data June 2017-May 2018; Prescriber-level data: IQVIA Xponent Nov 2016-Oct 2017; Ocular Steroid Market includes Prednisolone Acetate, Pred Forte, Lotemax, Durezol, FML, and Flarex

NOT FOR PROMOTIONAL USE

Surveyed Ophthalmologists Rate the INVELTYS Profile as Highly Compelling and Express Strong Intent to Prescribe*

13

Perception of INVELTYS Benefit Over Existing Treatment Options* (n=100 Ophthalmologists)

88%

0%

25%

50%

75%

100%

Offers additional benefits over existingregimens

1% 3% 2%

13%19%

38%

24%

0%

10%

20%

30%

40%

1 2 3 4 5 6 71 = Not at all likely 7 = Extremely likely

Likelihood to Prescribe INVELTYS* (n=100 Ophthalmologists)

Peak Preference Share for INVELTYS* (n=100 Ophthalmologists)

46%

30%24%

0%

10%

20%

30%

40%

50%

INVELTYS Other Branded Steroids Generic Steroids

Source: *Kala Quantitative Physician Market Research 2018, n=100 Ophthalmologists

NOT FOR PROMOTIONAL USE

Commercial Activities are Well Underway with Targeted Sales Launch in Early 2019

14

December:

Hire Sales Team

Q2 2018 Q3 2018 Q4 2018 Q1 2019

August 22, 2018:

INVELTYS FDA

Approval

Early 2019:

INVELTYS Launch

October:

Hire Sales Management Team

October-December:

Exhibits at AAO

Ophthalmology and AAO

Optometry

April to July:

Commercial Leadership Hired

NOT FOR PROMOTIONAL USE

Summary

15

Anticipated filing of Dry Eye NDA in 2H 2018;

STRIDE 3 Phase 3 Trial Initiated in July 2018

INVELTYS Peak Net Revenues Expected To Be

In Excess of $300M

MPP Platform Enhances Mobility of Drug Particles

Through Mucus Layers

INVELTYSTM: FIRST and ONLY Twice-daily Ocular Steroid

~8M ocular surgery procedures in 2017, projected to grow at a 3.9% CAGR over the next 5 years

KPI-121 0.25%: Potential First-Line Rx Therapy to Treat Dry Eye Flares

~33M dry eye sufferers in US

Source for ocular surgery market data: Market ScopeSource for dry eye disease market data: Epidemiology research commissioned by Kala and performed by a third party

NOT FOR PROMOTIONAL USE

Thank You